1.

Meaning of Social Responsibility

DEFINITION of 'Social Responsibility' Social responsibility is the idea that businesses should balance profit-
making activities with activities that benefit society; it involves developing businesses with a positive relationship
to the society in which they operate.
Social responsibility is a nebulous idea and hence is defined in various ways. Adolph Berle! has defined social
responsibility as the manager's responsiveness to public consensus. This means that there cannot be the same
set of social responsibilities applicable to all countries in all times. These would be determined in each case by the
customs, religions, traditions, level of industrialisation and a host of other norms and standard about which there
is a public consensus at any given time in a given society.
According to Keith Davis,' the term "social responsibility" refers to two types of business obligations, viz., (a)
the socio-economic obligation, and (b) the socio-human obligation.
The socio-economic obligation of every business is to see that the economic consequences of its actions do not
adversely affect public welfare. This includes obligations to promote employment op-opportunities, to maintain
competition, to curb inflation, etc. The socio-human obligation of every business is to nurture and
develop human values (such as morale, cooperation, motivation and self-realization in work).
Every business firm is part of a total economic and political system and not an island without foreign relations. It
is at the centre of a network of relationships to persons, groups and things. The businessman should, therefore,
consider the impact of his actions on all to which he is related. He should operate his business as a trustee for the
benefit of his employees, investors, consumers, the government and the general
public. His task is to mediate among these interests, to ensure that each gets a square deal and that nobody's
interests are unduly sacrificed to those of others.

2. Social Responsibilities of Business towards Different Groups

Social responsibility refers to a business's obligation to make decisions and take actions that align with societal
objectives and values. Businesses are influenced by external forces and have responsibilities towards various
groups, including:
1.Towards the Consumer and the Community
2.Towards Employees and Workers
3.Towards Shareholders and Other Businesses
4.Towards the government

Towards the Consumer and the Community

1. Produce affordable, high-quality goods by adopting innovations and rationalizing resources.
2. Reduce seasonal employment variations through accurate forecasting and production scheduling.
3. Prioritize production to conserve natural resources and benefit the country.
4. Ensure honest trade practices, avoiding misleading advertisements, false claims, and deceptive branding.
5. Prevent monopolies, as they lead to high prices, poor quality, and corruption.
6. Advertise responsibly by focusing on real consumer needs rather than creating artificial desires.
7. Provide after-sale services and maintain public relations by sharing transparent and accessible information.
8. Ensure proper disposal of waste and contribute to community development programs like education and slum
clearance.
Towards Employees and Workers
1. Offer fair wages and accept a ceiling on profits to ensure equity.
2. Practice non-discriminatory selection, training, and promotion.
3. Provide social security measures and maintain good working conditions.
4. Promote industrial peace and create an environment for collective bargaining and participative management.
5. Foster workers' freedom, self-respect, and self-realization for a fulfilling life.
6. Boost productivity by recognizing merit, encouraging creativity, and offering incentives.
 Towards Shareholders and Other Businesses
1. Ensure internal accountability and transparency in governance.
2. Maintain fair competition based on ethics, avoiding malicious practices like price-cutting and false propaganda.
Towards the Government
1. Avoid direct involvement with political parties.
2. Adhere to laws aimed at guiding economic and business practices, ensuring harmony between business interests
and societal goals.
3. Support equitable resource allocation, rural development, and distributive justice to benefit weaker sections of
society.
4. Comply with government policies to maximize production and ensure fair practices for all stakeholders.
By acting responsibly towards these groups, businesses contribute to societal welfare, ethical governance, and
sustainable development.

3. Social Audit
A social audit is a systematic study and evaluation of the organization’s social performance as distinguished from
its economic performance. The term "social performance" refers to any organizational activity that effects the
general welfare of society.
Benefits of Social Audit
1. Supplies data to compare social policies and objectives, helping management assess performance.
2. Cultivates social awareness among employees, enhancing understanding of societal impacts.
3. Provides data to evaluate program effectiveness.
4. Offers cost analysis of social programs, aiding budget and resource allocation.
5. Equips management to respond effectively to external societal demands.
Limitations of Social Audit
Social audits assess processes, not outcomes, as measuring social results is challenging due to:
1. Difficulty quantifying effects; e.g., linking employment programs to reduced crime rates.
2. Varied classification of results as "good" or "bad" based on differing opinions.
3. External factors make obtaining data difficult.
Despite challenges, social audits remain valuable as they quantify organizational effort in socially beneficial areas.
If effort can be measured, potential results can be better understood.
Conducting Social Audits
Audits can involve internal experts, external consultants, or both. Internal auditors offer business familiarity but
may face bias, while external consultants bring objectivity but might miss internal nuances. Public release of
audit reports is debated; critics argue these reports may appear vague, yet supporters believe they enhance
public understanding by presenting factual insights.
Example: Tata Iron and Steel Company (TISCO)
TISCO conducted India’s first social audit in 1979, led by a committee chaired by Justice S.P. Kotval. The audit
examined how well TISCO met its social responsibilities to stakeholders. The committee praised TISCO’s social
efforts and provided recommendations for improvement.

4. Business Ethics and Corporate Governance

Business Ethics
Business ethics involves the application of moral principles to business problems, extending beyond legality to
the goodness or badness of an act. For example, a village grocer charging exorbitant prices may act legally but
not ethically. Issues like sexual harassment, pay discrimination, and privacy are particularly relevant.
Sexual harassment, defined as unwelcome sexual advances or conduct, remains a significant issue. Despite the
Supreme Court's Vishaka guidelines, many organizations lag in prevention. Harassment negatively impacts morale,
productivity, and staff retention while risking costly lawsuits.
 Pay and promotion discrimination against women persists, despite the Equal Remuneration Act of 1976. The "glass
ceiling" effect—a term for organizational barriers—prevents qualified women from advancing to senior
management.
Employee privacy rights raise ethical questions: Can companies reject smokers or enforce drug tests? Businesses
face public condemnation for unethical actions, despite legal protections for management. High ethical standards
and integrity are critical to a company’s credibility.
Deciding Ethical Actions
Four factors influence managerial decisions on ethics:
1. Government legislation.
2. Business codes, often voluntary and inconsistently applied.
3. Pressure groups, such as Western boycotts of Indian carpets due to child labor.
4. Personal values, which may clash with business goals.
Many companies now teach executives to balance personal morals with corporate pressures. Approaches include
writing autobiographies to foster moral decision-making. Infosys exemplifies ethical commitment, with its "under-
promise, over-deliver" motto.
Corporate Governance
Corporate governance ensures companies operate transparently and in stakeholders’ best interests. It includes
systems of checks and balances among directors, auditors, and stakeholders. Following scandals in the 1990s,
Britain’s Cadbury Committee developed a governance code with key recommendations:
1. Independent non-executive directors should contribute unbiased judgments on strategy and performance.
2. Remuneration committees, mainly non-executive directors, should recommend executive pay.
3. Audit committees with at least three non-executive directors should oversee financial management.
4. Audit partners should rotate, and non-audit work should be disclosed.
While voluntary, the London Stock Exchange requires companies to report compliance with the code.
Benefits of Good Corporate Governance
1. Builds market confidence and trust.
2. Enhances share prices.
3. Ensures financial report integrity.
4. Acts as a whistleblower for corporate security.
5. Limits management liability by structuring decision-making.
6. Encourages strategic thinking through independent directors.

5. Definition of Entrepreneur
The term "Entrepreneur" is defined in variety of ways. It varies from country to country, time to time and the level of economic
development.
The word "entrepreneur" is derived from the French verb "entreprendre" which means "to undertake". In 16th century, the
Frenchmen who organized and led military expeditions were referred to as "entrepreneurs".
In early 18th century, French economist Richard Cantillon used the word entrepreneur to business. Since then the word
entrepreneur is used to one who takes the risk of stating new organization or business or introducing a new idea, product or
service to society.
According to Joseph Schumpeter "An entrepreneur in an advanced economy, is an individual who introduces something new
in the economy a method of production not yet tested by experience in the branch of manufacture concerned, a product
with which consumers are not yet familiar, a new source of raw materials or of new markets and the life”. Accordingly to him
the functions of an entrepreneurship are:
Introduction of new product Introduction of new methods of production
• Development of new markets and finding fresh sources of raw materials and
• Making changes
Cantillon defined entrepreneur as "The agent who buys factors of production at certain prices in order to combine them into
a product with a view to selling it at uncertain prices in future". To summaries, "an entrepreneur is the person who bears risk,
unites various factors of production, to explore the perceived opportunities in order to evoke demand, create wealth and
employment".
6. Importance of Entrepreneurship
Entrepreneurship is the dynamic process of creating incremental wealth and innovating things of value that
contribute to the welfare of society. Entrepreneurs drive progress and prosperity by perceiving opportunities
and acting on them.
1. Growth of Entrepreneurship
Entrepreneurship leads to the establishment of new ventures, especially small enterprises, contributing to
economic development worldwide. In the U.S., nearly half a million small enterprises are established annually,
reflecting the importance of entrepreneurship.
2. Creation of Job Opportunities
Entrepreneurial ventures create a significant share of new jobs, providing training and experience for unskilled
workers. Small enterprises generate a large portion of total employment each year and supply experienced labor
to larger industries.
3. Innovation
Entrepreneurship serves as an incubator for innovation, going beyond discovery to implement and
commercialize new ideas. This includes "leapfrog" innovations that enhance technology, markets, and product
quality, boosting GDP and the standard of living.
4. Impact on Community Development
A diversified employment base through small entrepreneurial firms promotes higher community quality of life.
This leads to better sanitation, higher home ownership, fewer slums, and increased education, recreation, and
religious activities.
5. Consequence of Business Failure
The collapse of large industries can cause widespread economic damage, while entrepreneurial failure has
minimal effects on the economy and avoids political repercussions.
6. Political and Economic Integration of Outsiders
Entrepreneurship is crucial for integrating minorities, migrants, and women into the economy, fostering a well-
composed plural society.
7. Spawns Entrepreneurship
Entrepreneurship serves as a nurturing ground for inexperienced adventurists, where small ventures can evolve
into large industrial enterprises.
8. Enhances Standard of Living
Standard of living is enhanced through diversified goods and services created by entrepreneurship, along with
increased income for those employed in entrepreneurial enterprises.
9. Promotes Research and Development
Entrepreneurship funds research and development, partnering with universities and research institutions to
drive innovation and overall economic growth.

7. Concepts of Entrepreneurship
Entrepreneurship is a process undertaken by an entrepreneur to augment his business interests. Some authors
define it as "Entrepreneurship is the indivisible process flourishes. when the interlinked dimensions of individual
psychological entrepreneurship. entrepreneur traits. social encouragement. business opportunities. Government
policies, availability of resources and opportunities coverage towards the common good. development of the
society and economy".
Entrepreneurship lies more in the ability to minimize the use of resources and to put them to maximum advantage.
Above all, entrepreneurship in today's context is the product of teamwork and the ability to create, build and work
as a team.
Entrepreneurship is the process of identifying opportunities in the market place, arranging the resources required
to pursue these opportunities and inverting the resources to exploit the opportunities for better gains.
 Higgins defined entrepreneurship as "the function of foreseeing investment and production opportunities,
organizing an enterprise to undertake a new production process, raising capital. hiring labor, arranging the supply
of raw materials, finding site, introducing new technique, discovering new source of raw materials and selecting
top managers for day-to-day operation.
Cole's definition for entrepreneurship is "the purposeful activity of an individual or a group of associated
individuals undertaken to initiate, maintain or organize profit by production or distributing of economic goods and
services".
Risk bearing, innovating and resource organizing, achieving goal through production of goods or services. All the
above definitions highlight the risk bearing, innovating and resource organizing, achieving goal through production
of goods or services.

8. Characteristics of successful Entrepreneur

The process of entrepreneurship is a complex one having multidimensional characteristics. The following are some
of the commonly accepted characteristics suggested by experts.
(i) Innovation
Entrepreneurship involves innovation of new things to effect dynamic changes and good success in economy. It
should create conditions for growth of the economy.
(ii) Risk-taking
Risk is a inbuilt element of any business. Entrepreneurship should be risk bearing to cater uncertainty of future.
(iii) Skillful management
Entrepreneurship brings together various functions of the management —planning, organizing, staffing, directing,
controlling and leading.
(iv) Organization
It brings together various facilities of production for an efficient and economical use.
(v) Decision making
Decision-making is a very vital characteristic of an entrepreneurship. Taking decisions at all levels and stages of an
entrepreneurship is a routine task.
(vi) Making the enterprise a success
Entrepreneurship is mainly an economic activity as it deals with creating and operating an enterprise. it involves
in satisfying the needs of customers with the help of production and distribution of goods and services. This makes
the enterprise a success.
There are common qualities or skills found in successful entrepreneurs; expansion of the word 'ENTREPRENEUR'
gives a good idea of successful entrepreneurs.
E - Effective Communicator
N - Negotiating skills.
T - Total Commitment / Time management / Tactical / Team man
R - Risk-taking ability / Resourceful / Responsible
E - Emotional Stability / Ethical
P - Problem solving / Patience / Passion / Perseverance
R - Relations-Human & public / Realistic / Result-oriented
E - Energetic / Endurance
N - Networking ability.
E - Excellence in 'Economics'
U - Understands how to administer and organize / Unambiguous
R - Real innovator.

9. Classification of Entrepreneurs
Entrepreneurs in business can be broadly classified based on criteria like - stages of economic development, types
of business, use of technology, area, age, gender and so on:
 1. Innovative Entrepreneur
• Introduces new products, techniques, or markets.
• Organizes and re-organizes enterprises as needed.
• Aggressive in experimentation and seizing
opportunities.
• Raises capital, assembles factors, selects employees,
and sets up the organization.
• Common in developed countries due to the required
development level.
2. Imitative Entrepreneur
• Adopts or copies successful innovations from others.
• Does not innovate but imitates techniques and
technology.
• More prevalent in developing countries where imitation
is favored.
• Plays a crucial role in the development of poorer
nations.
3. Fabian Entrepreneur
• Cautious and skeptical about changes.
• Reluctant to introduce new changes or adopt
innovations.
• Driven by tradition, custom, and past practices.
• Brings in changes only when survival is at stake.
4. Drone Entrepreneur
• Resistant to all forms of change.
• Refuses to adopt or imitate new methods.
• Prefers traditional methods despite potential losses.
• Example: Ideal Jawa motorbike company in India.

10. Myths of Entrepreneurship

Entrepreneurship is a career gaining popularity worldwide but still misunderstood, leading to many myths. These
myths deter people from pursuing their ambition despite having great ideas. Below are the most common myths
debunked:
1. Entrepreneurs are born, not made
This is a common myth, but it's untrue. With the right skills—leadership, managerial, and risk-taking abilities—
anyone with a viable idea can become an entrepreneur.
2. All you need is money
While funding is important, having money alone doesn’t guarantee success. Money must be used wisely,
focusing on areas that truly require investment.
3. Entrepreneurs are usually college drop-outs
While successful entrepreneurs like Mark Zuckerberg and Steve Jobs didn’t complete college, having a formal
education can help in understanding business concepts. However, entrepreneurial success comes from ideas and
skills, not a degree.
4. You need an out-of-the-box idea to start up
This myth is misleading. Entrepreneurs don’t always need a completely new or innovative idea. Adding value to
existing ideas or solving societal problems can be a strong foundation for entrepreneurship.
5. Having no boss is the best feeling
Many believe entrepreneurship means setting your own terms and leading a team without supervision.
However, even successful entrepreneurs seek guidance from mentors and superiors to navigate challenges
effectively.
 6. You need the perfect timing
The notion that timing and luck dictate entrepreneurial success is debunked by history. Successful entrepreneurs
like Reid Hoffman found success later in life despite having brilliant ideas.
7. Starting a business isn’t that difficult
Many believe entrepreneurship is easy because some successful entrepreneurs didn’t attend traditional
education. However, entrepreneurship requires hard work, persistence, and overcoming failures, which isn’t
easy for everyone.
This clarifies common misconceptions, showcasing that while entrepreneurship can be rewarding, it requires
continuous effort, adaptability, and the right mindset.

11. Entrepreneurial Development models

The models for the development of the entrepreneurship fall in the following categories
1. Psychological models
2. Sociological Models
3. Integrated Models
1. Psychological Models
McClelland (1961) emphasized the importance of achievement motives, initially linked to child-rearing practices.
D.G Winter refined this idea, identifying achievement motive as an intrinsic determinant. Changes in motivation
primarily arise from ideological arousal of the talent need for achievement among adults. McClelland proposed
motivation-training programs as policy measures to foster entrepreneurial willingness and eagerness to exploit
new opportunities.
Everett Hagen’s theory of Social Change emphasizes the role of "Creative Personality" as a causal link in
entrepreneurial behavior and "Status withdrawal" as a determinant of creative personality. However, his model
lacks positive variables for developing entrepreneurship, as "status withdrawal" occurs naturally through societal
evolution rather than deliberate attempts.
John Kunkel (1965) introduced a behaviourist model, suggesting that entrepreneurial behavior is influenced by
both past and present social structures, which can be manipulated through economic and social incentives.
Kunkel’s model focuses on sociological variables as determinants of entrepreneurial supply.
2. Sociological Model
Frank W Young’s theory of entrepreneurship is based on incorporating relative sub-groups within society. Low-
status sub-groups will exhibit entrepreneurial behavior if they possess better institutional resources compared
to others at the same level. Young advocates for the creation of supporting institutions to enhance
entrepreneurship.
3. Integrated Model
T.V Rao (1975) presents the "Entrepreneurial Disposition" model, which includes:
• Need for motive as a dynamic driving prospective entrepreneurs to achieve goals through specific activities.
• Long-term involvement either in thinking or activity related to entrepreneurial goals.
• Personal, social, and material resources essential for entry and success in entrepreneurial activities.
• A soci-political system perceived as suitable for establishing and developing enterprises.

12. Entrepreneurial development cycle

Entrepreneurs are not just born; they can be developed and trained to undertake ventures. However, not everyone
has the potential to become an entrepreneur. Entrepreneurial development is an educational process and a
human resource development endeavour, aimed at instilling motivational drives and situations conducive to
business undertakings.
In many developing countries, especially in backward areas, the socio-economic environment has not been
favorable for entrepreneurial talent to emerge. Entrepreneurs originate from all strata of society, but their abilities
often remain latent. Thus, identifying, motivating, and supporting these talents is crucial.
To accelerate the formation of indigenous enterprises, imaginative development programs and sound institutional
support are necessary. Entrepreneurs do not always respond spontaneously to business opportunities despite
various schemes and programs aimed at promoting and assisting them. An effective mechanism is required once
they are identified.
Entrepreneurship thrives in an environment that fosters learning and supports entrepreneurial functions. Key
prerequisites for entrepreneurial development include intelligence, motivation, knowledge, sustained efforts,
government assistance, and opportunities. The process involves training, education, reorientation, and creating a
conducive environment for enterprise growth.
Entrepreneurial development focuses on equipping individuals with the necessary information for enterprise
building, while also sharpening their entrepreneurial skills. The goal is to motivate individuals toward an
entrepreneurial career and enable them to successfully perceive and exploit business opportunities. This process
serves as a tool for industrialization and a solution to unemployment. A trained entrepreneur can guide others in
starting their own enterprises, contributing to a sustainable entrepreneurial development cycle.
13. Problems faced by Entrepreneurs
Entrepreneurs face challenges in production, marketing, distribution, raw material procurement, and availing state
incentives. Problems are categorized as external (beyond control) and internal (influenced by external factors).
Industries, whether small or organized, face similar issues.
However, organized sectors are financially stronger and can handle problems more effectively. Small enterprises
have limited resources and rely heavily on the proprietor or partners for management. The large sector can
influence policies, whereas small entrepreneurs often face helpless situations in dealing with suppliers, customers,
and government policies.

I. Internal Problems of Entrepreneurs

1. Planning

a) Technical feasibility b) Economic viability

• Inadequate technical know-how. • High cost of input. • Lack of strategies
• Locational disadvantage • Break-even point too high • Lack of vision
• Outdated production process • Uneconomic size of project • Inadequate connections
• Choice of idea • Lack of motivation
• Underestimation of financial
• Feeble structure
requirements
• Faulty planning • Unduly large investment in
• Poor Project Implementations fixed assets
2. Implementation
Cost over-runs resulting from delays in getting licenses, sanctions and so on and
inadequate mobilization of finance.
3. Production
a) Production management b) Labor management c) Marketing Management
• Inappropriate product mix • Excising high wage structure • Dependence on a single
customer or a limited number of
customers/single or a limited
number of products.
• Poor quality control • Inefficient handling of labor problems • Poor sales realization
• Poor capacity utilization • Excessive manpower • Defective pricing policy
• High cost of production • Poor Labor productivity • Weak market organization
• Poor inventory maintenance • Poor labor relations • Booking of large orders at fixed
and replacement prices in an inflationary market
• Lack of timely and adequate • Lack of trained skilled labor or • Lack of market feedback and
modernization and so on technically competent personnel market research
• High wastage • Unscrupulous sale purchase
• Poor production practices
d) Financial management e) Administrative management
• Poor resource management • Unfavorable gearing or keeping • Over centralization
and financial planning adverse debt equity ratio
• Faulty costing • Over trading • Lack of professionalism
• Dividend policy • Inadequate working capital • Lack of timely diversification
• General financial indiscipline • Absence of cost consciousness • Lack of feedback to
and application of funds for management (management
unauthorized purposes Information System)
• Deficiency of funds • Lack of effective collection machinery • Excessive expenditure on R&D
 II. External Problems of Entrepreneurs

a) Infrastructure (b)Financial
• Location • Capital
• Power • Working capital
• Water • Long term funds
• Post Office and so on • Recovery
• Communication • Marketing Taxation
• Non-availability or irregular supply of • Raw material
critical raw materials or other inputs
• Transport bottlenecks • Industrial and financial regulations
• Inspections
• Technology
• Government policy administrative hurdles
• Rampant corruption
• Lack of direction
• Competitive and volatile environment

14. Capacity building for Entrepreneurship

To be a successful entrepreneur, individuals must build capacities in four key strategic areas – Operational,
Management, Financial Management, and Personal capacities. Entrepreneur capacity building involves
developing the combination of all four capacity elements, to provide the ingredients for a great entrepreneurial
success soup.
Some of these capacities are gained through experience throughout your career, while others are learned through
educational avenues. Some successful entrepreneurs are born with strong personality traits, and some behaviors
are strengthened through learned responses in the business environment.
1. Operational Capacity Building
Having a brilliant understanding of an industry and business at ground level builds operational capacity. This
involves working in a variety of business operations for a period of time prior to diving into entrepreneurship.
Gaining valuable insight into what makes businesses tick enables one to lead, organize, and plan for operations
effectively.
2. Management Capacity Building
Taking operational experience one more step, gaining management experience in a field or business will be
directly applicable to managing your own business. Managing operations, resources, and people gives you the
applicable tools for your own business. With a few years of management experience, you will gain management
capacity and an understanding of responsibilities and accountabilities, all precursors to managing your own
company.
3. Financial Management Capacity Building
Through a combination of work experience and education, you need to be well-grounded and versed in managing
finances. Accurate estimation and understanding of financial statements are crucial. Analyzing financial
statements, looking at trends and indicators, helps maintain the business’s financial health. Financial reports
provide key insights that financial institutions and partners will scrutinize.
4. Personal Capacity Building
Of extreme importance, if you don’t have key personal entrepreneurial traits, your business may not succeed.
Strong traits such as dedication, perseverance, ambition, determination, strong-will, openness, honesty,
transparency, and fairness can move you along the path to becoming a successful entrepreneur.